Saturday February 12, 2005 - 08:57:14 GMT
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Forex: Daily Forecast for the U.S. Dollar vs Japanese Yen 14th February 2005 Price:
Resistance: 106.06 ... 106.27 ... 106.48 ... 106.84
Support....: 105.47 ... 105.12 ... 104.76 ... 104.59
Mixed - waiting for breaks
We continue to see break of the 105.12-106.06 range as providing the next 40-50 points. If we have any preference then it is a break higher but we cannot rule out an initial dip lower towards the low end of this range. Thus only above 106.06 would cause a move through to the 106.48-55 area which should be observed for signs of resistance. Break there would be needed to see a renewed test of the 106.84 high and even if seen, then we feel the 107.20-40 area will cap for a return lower again.
Friday saw the 105.30 level continue to hold but without any break higher either. Key support is at 105.12-30 and only below here would allow a deeper move lower to 104.59 which we feel is an important clue for the next larger move. Break of 104.40-59 would imply a much larger retracement is at hand and could mean a decline to the 103.64-83 area.
Elliott Wave Comments:
14th February 2005
The reversal from 106.84 required us to adjust our wave count last week. The first thing to note is that the 106.84 peak only 8 points away from a 38.2% retracement of the 111.71 -> 101.82 decline. This could imply a flat correction from the 101.82 low and thus suggest a new low in Wave [v]
which should reach 99.65-100.26 at least and possibly 98.71. A break of 104.59 would raise this threat.
What we did note was that from the 103.48 low the 106.82 level was implied as an internal Wave v. This peak also represents an approximate extension of Wave [a] by 138.2%. Then we have to clarify the initial rally and while our preference was for 103.90 to be the Wave [i] peak we can generate a count that calls for the 104.30 peak to be Wave [i] and this would imply the 106.84 area as a target for Wave [iii].
Thus we require a break level that will give a warning of a larger move lower. The first lies at the 50% retracement of the (adjusted) Wave [iii]. This rests at 104.59 and thus we use this as the downward signal. The second is at 104.25 which represents a 50% retracement of the rally from 101.67 to 106.84 which, having developed in 5 waves could well be merely Wave [a] higher.
We should also consider Elliott Guidelines which suggest that after a short but deep Wave [ii] we would expect a shallow and long Wave [iv]. The decline from 106.84 has reached back down to the prior Wave (iv) and we also see a 38.2% retracement at 105.12. Thus while a bullish stance is more valid we feel that a period of range trading is probable above 105.12 and lasting around 3-5 days. This correction could be any of a flat, expanded flat of triangle and we need to see the next price development to begin to make a reasoned judgment.
(c) FX-Strategy Inc 2005
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